Singapore court fines Indonesian tycoon Kris Wiluan S$480,000 for market rigging

Former chief executive of offshore and marine company KS Energy Kris Taenar Wiluan. - ST

SINGAPORE (The Straits Times/ANN): Indonesian tycoon and former chief executive of offshore and marine company KS Energy Kris Taenar Wiluan was fined S$480,000 after pleading guilty on Wednesday (May 19) to three charges of market rigging.

He had been handed 112 charges in relation to violations of Section 197 of the Securities and Futures Act, which deals with false trading and market-rigging transactions. However, the 112 charges were subsequently amalgamated to cover all the offending trades over the relevant period.

Deputy Public Prosecutor Kevin Yong on Wednesday said the prosecution is proceeding on three of six charges, with the remaining three charges taken into consideration as part of Wiluan's plea bargain deal.

The prosecution had sought a fine of $600,000 comprising $200,000 for each of the three proceeded charges, which was the highest sought for market rigging offences.

"Prosecution is seeking a high fine for the purposes of general deterrence and to reflect his culpability as mastermind of the market rigging operation," DPP Yong said.

“For fairness, we considered several mitigating factors. He was cooperative, remorseful and pleaded guilty at the first opportunity. He was also a first time offender and did not have a profit motive for his market rigging offences.

“But we are asking for a higher fine because we want to point out that the quantum should be sufficiently high, so that other like-minded individuals won’t carry out such operations, ” he said.

Before the State Courts hearing began, Wiluan, clad in a black suit was seated a metre apart from his wife, who was holding a prayer card and an embroidered handkerchief. After his sentence was issued, his wife told The Straits Times: “He is a good man. I can vouch for it as I have been married to him for more than 50 years.”

Wiluan, also founder of Indonesia's Citramas Group, was accused of instructing his employee, Ho Chee Yen, 56, to instruct a trading representative from CIMB Securities (Singapore) to execute trades in the shares of KS Energy through the trading account of Pacific One Energy, a company controlled by Wiluan, on various occasions between December 2014 and September 2016, to "push up" the share price of the mainboard-listed company.

Wiluan, 72, who was ranked Indonesia’s 40th richest man by Forbes in 2009 with a personal net worth of US$240 million, was also accused of instructing Ngin Kim Choo and Yeo Jin Lui, two CIMB Securities trading representatives servicing the trading account of Pacific One, to execute trades in KS Energy’s shares, “with a purpose to push up” its price on certain trading days.

“To achieve his target price, buy orders in the last 15 minutes of trading and during the closing routine were placed to set the closing price of KS Energy shares in a practice commonly known as “marking the close”.

Buy orders were also placed at several bids above the last done price, instead of at the most competitive prices and at the minimum trading size, in order to increase KSE share price at the lowest possible cost, ” the police said.

“A stern warning, in lieu of prosecution, has been administered against Ho for intentionally aiding the accused with the market rigging, ” the police said.

But the prosecution noted that there is “no evidence that the market rigging offences caused other KS Energy investors to suffer losses as Wiluan consistently purchased but never sold any KSE shares during the period of the charges.”

One purpose of the market rigging offences was to prevent potential margin calls by OCBC on the KS Energy shares pledged to the bank as collateral for loans that Pacific One Energy took from OCBC.

But OCBC did not suffer any loss, and Wiluan did eventually pay down the loan to OCBC in full, and also had sufficient assets to provide additional collateral to OCBC in the event of a margin call, the prosecution noted.

Senior Counsel Jimmy Yim of Drew & Napier, who represents Wiluan, said it was not fair to classify him as the “mastermind” of the market rigging operation.

“It is not disputed that there is no evidence Wiluan knew how these methods were being done by trading representatives to effect his purpose. He is the one who instructed them to do it but... he didn’t know the nuances and intricacies of trading. He left it to the brokers, who didn’t warn him.

“I’m not shifting the blame that he should be scot-free, but the facts show his culpability is on the lowest end.

In a statement, Wiluan said that at the time he was “unaware that my actions to support KSE stock were transgressing the Securities and Futures Act.

“I accept that my ignorance and misguidance are no defense and I am very sorry for my actions. I have learnt a painful lesson.”

In Wiluan’s mitigation plea, Yim said: “We ask for judicial mercy as he has a slew of illnesses at his age... The illnesses are serious enough if a custodial sentence is imposed.

“My client has been an important player in oil and gas industry and he has done a lot of charitable donations in many fields... The commission of this offence is out of character and most unfortunate, and he has suffered tremendously.” - The Straits Times/Asia News Network

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